Warehouses are incredibly useful premises for small and large businesses. However, how do they actually work and how can you use them for your benefit?
My name’s Balaji Badrinath, and today I’m bringing you a special article where I’ll explain how warehouses work. Stay until the end of our article to learn how you can use the warehouse to benefit your business in Bangalore, and also subscribe to my newsletter for more tips and tricks on real estate.
Warehouses are old-timers in the world of commercial real estate but have been making an incredible comeback in the past few years. A big part of this is Amazon and other e-commerce companies that are responsible for 40% of industrial property leases, with that number steadily rising as other brick and mortar companies rush to include e-commerce as part of their business model.
But tech companies are also responsible for the increase in demand, due to the need for more server farms to support online commerce.
Surprisingly or perhaps not for real estate investors, the best warehouse buildings are Class B, C and D. Investors are actually racing to the bottom for previously outdated or obsolete industrial buildings. These buildings would normally be considered too old to lease, however, due to their urban locations, these properties are actually outperforming newer facilities. These ancient warehouses are usually less than 200,000 square feet in size and are seen by experts as the ideal opportunity for investors interested in investing in industrial properties.
After all, businesses want the space for their products and leasing. They are definitely not looking for a five-star hotel for storage.
Other tech companies that use very advanced technological processes for their products might prefer a new warehouse to maximize space or recommend rebuilding and reworking an old one to update it.
These newer buildings offer the best in terms of automation and robotics, making it easier for companies to handle high volumes of smaller packages from customers. The size of newer buildings is also a deciding factor for many top companies, as facilities have doubled in size over the last ten years.
It all depends on the company and what they are looking to get out of the warehouse at the end of the day.
So, warehouse value is estimated according to most of the variable factors seen in other real estate properties. You can estimate the price of a warehouse by comparing it to similar warehouses in the same area or same city. Most warehouse space is priced by the square foot and its condition. If it’s older and less secure, contains less specialized equipment and has more free space, then it probably has a much lower price.
The location of a warehouse is essential for its purchase and management. The ability to deliver product quickly is a critical component of selecting the site for a warehouse. For e-commerce companies, warehouses need to be located near transportation and have access to airports and seaports in addition to highways.
Distribution companies also need to be near larger population centres, since that is where more trucks needed for cross-country delivery are located. You should also avoid large traffic and higher cost of land, which are sadly two traits that tend to come with larger population centres.
That’s why Bangalore has become such a popular place for warehouses.
Let’s talk a little bit about Bangalore’s setting for warehouses in the area. Bangalore is home of big giant companies, with almost every IT company in India being located in Bangalore in the first place. That means that, of course, companies will choose places where they can easily control the main branches of big e-commerce. Bangalore is also very close to a seaport, with the closest one being less than 250 kilometres from the city. While many warehouses can be found in other cities, they usually aren’t handled to be kept for long.
Most commercial and industrial warehouses have taken over responsibilities from the corporate world, sending orders upstream for downstream demand, based on their own aggregate forecasts. Or perhaps they are part of the cost engineering function of the company, planning the shipping schedule, to and from their own walls, and beyond. A warehouse can also be responsible for building and maintaining a supply network.
Among the core responsibilities of a warehouse, we can mention workplace safety, temperature control, cleanliness and the registering of movement items. Certifications for industrial equipment are also needed. There’s a lot of innovation and improvements required in the warehousing activities in our country since the cost of logistics and warehousing is very high to the cost of production as compared to other developed nations.
Warehouses are mostly operated and ran by warehouse managers and workers.
A Warehouse Worker’s general role consists of receiving, sorting, and stocking goods for the latter dispatching. Warehouses are used mainly by companies, businesses, and sometimes individuals, to store and keep items of different natures, including food, products, technological items, clothes, and furniture. They are those in charge of the day to day tasks and jobs of the warehouse.
So, for this last section of the article, I’m going to describe each of the processes in the warehouse and how exactly things work with the products that go there.
Receiving is the first warehouse process and one of the most crucial. To perform the receiving process properly, the warehouse should be able to verify that it has received the right product, in the right quantity, in the right condition, and at the right time. Failing to do so will have consequent impacts on all subsequent operations
Receiving also involves the transfer of responsibility for the goods to the warehouse. Sorting involves the movement of goods from the receiving dock to the most optimal warehouse storage location. Failing to place goods in their most ideal location can impair the productivity of warehouse operation. Software such as slotting and space management systems automatically assign optimal spaces for each cargo to allow for a streamlined putaway process and maximized space utilization. In addition, put away mobile applications and devices direct clerks to store cargo in the right location. Storing is the next important process involved in a warehouse, which consists of good being placed into their most appropriate storage space.
When done properly, the storage process fully maximizes the available space in your warehouse and increases labour efficiency. This process can be optimized by tracking the right key point indicators in the warehouse, which ensures that the job is being done. Having software that automatically calculates your warehouse storage utilization and tracks the right storage KPIs will allow you to determine how efficient each aspect of your storage process is. Slotting optimization systems can also help you by assisting with the allocation of the best storage location for a given cargo. You should use the right warehouse storage system according to the size of your facility and product mix allows you to maximize your horizontal and vertical spaces while improving warehouse efficiency.
Picking is the next warehouse process that involves collecting products in a warehouse to fulfil customer orders. That’s when the item is finally requested by customer order and the warehouse workers must deliver it to the relevant shipping carrier in order for it to reach the customer. Since it is the costliest process in the warehouse, comprising as much as 55% of the total operating expense, any kind of smart business owner will strive to optimize this process to make it as efficient as they can. Technologies such as mobile and wearables can streamline the picking process because they allow clerks to view picking lists wirelessly, access systems in real-time, and scan anywhere in the warehouse.
Packing is the second to last warehouse process, which handles the picked items in a sales order and prepares them for shipment to the customer. One of the primary tasks of packing is to ensure that damages are minimized from the time items leave the warehouse. Additionally, packaging must be light enough so as not to increase the weight of the goods and minimal enough to control packaging costs.
And finally, we have shipped. This is the final warehouse process and from this moment and on, the product will be dispatched from the warehouse to the customer. Shipping is considered successful only if the right order is sorted and loaded, is dispatched to the right customer, travels through the right transit mode, and is delivered safely and on time. All of the previous processes are important for shipping, as they will determine whether the order is fulfilled accurately and safely.
So, what are your thoughts on warehouses? Will you be using them for rental for your business, or will you pass up on this opportunity? Let me know in the comments below! Also, don’t forget to leave me a like, share this article with your friends and also subscribe to my channel. I hope you enjoyed my blog, and I’ll see you in the next one too!